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The Uncertain Business of Building New Nuclear

The Uncertain Business of Building New Nuclear BNET industries By Chris Morrison | January 7th, 2009

A new study on Climate Progress has some surprising conclusions for nuclear power. Final costs for generating power at new plants, the study says, will be 25 to 30 cents per kilowatt-hour, which is some three times the cost of today’s energy.

Nuclear is a major part of some plans to move away from fossil fuels like coal and gas, so numbers like this should be extremely worrying to advocates of atomic power……………..
…………….. Historical costs have exceeded initial estimates, and current costs are rising

Severance points to a Cambridge Energy Research Associates report that shows a 131 percent increase in the cost of power plants from 2000 – 2008. That’s is a particular problem for nuclear, because plants can take 10 years or more to build, meaning initial estimates have to factor in future cost increases (or be wrong).

This is a vicious circle, because the long time frame involved increases the business risks of the project, risk that in turn increases expenses. Furthermore, the length of time it takes to build plants means that utilities must pay interest on any debt they took out for construction (usually running in the the billions of dollars) for years before seeing any income.

These might appear to be problems that can be overcome with good planning. Unfortunately, most current designs for nuclear plants haven’t been proven in the field, meaning there’s an element of learn-as-you-go for the people who are building. On a $10 billion project, that’s not a good thing………………..For any cost overruns that do occur, it will likely be the utility or ratepayers that foot the bill, as nuclear plant construction firms are wising up and adding contract provisions that mandate profits for them……………………………One potential side-affect of cost-overruns and delays is outright abandonment of projects. That happened with the Washington Public Power Supply System, which defaulted on $2.25 billion in loans when it walked away from a nuclear project.

Utilities constructing nuclear plants may find their credit ratings dropping……………………..

Higher electricity rates from nuclear may destroy demand for the energy

If the above issues come to a head and ratepayers end up eating the costs, they may simply choose to use less power, or tap into sources like home solar and wind, which may well become cheaper than energy from the utility.

The Uncertain Business of Building New Nuclear | BNET Energy Blog | BNET

Tags: nuclear, antinuclear, uranium, radioactive

January 9, 2009 - Posted by Christina Macpherson | business and costs